The head of promotion company Live Nation says the public-private project needs a pro sports team.

The head of Canada’s biggest concert promotion company and a key player in the proposed $325-million arena in Markham has cast doubts on the project’s viability without a major sports tenant.

Riley O’Connor, chair of Live Nation Canada, told the Star on Monday that the arena will need an NHL franchise, other pro hockey or basketball team, because concerts won’t be able to generate enough revenue for a successful business.

“You really need a major tenant to make that happen,” he said. “In almost all major Canadian arenas, that’s an NHL team, an AHL team, a major junior hockey team. You can’t do it on concerts alone.”

But O’Connor’s comments mark the first time that someone in the arena group of consultants and advisers has raised doubts about the project’s viability without a major tenant.

“Look, I really support Graeme in his dream, but at some point you really have to look at the risks involved,” O’Connor said in an interview.

Philadelphia-based Global Spectrum, another partner in the project, has estimated the 20,000-seat Markham arena could attract 133 events annually. Roustan, a former rink operator in the U.S., has noted the arena doesn’t even need to reach that target to remain a strong business.

However O’Connor said big arenas around the country need about 200 event days a year to flourish, and the only way to reach that level is with a sports club that uses it for 40 or more dates a year. The Air Canada Centre in downtown Toronto attracts more than 200 event days a year, with the hockey Maple Leafs and basketball Raptors filling about half of the dates.

Furthermore, O’Connor said the owners must make a profit to pay off the debts to construct the arena.

In April, Markham council voted overwhelmingly to support a financial plan for an NHL-sized arena near Warden Ave. and Highway 407 in a public-private partnership. Markham would borrow $325 million and half of it will be repaid by GTA Centre LP, the entity that will lease the arena.

The city, which would own the building, plans to generate funds for its half of the project through charges on future development. Council must still give final approval after negotiating key terms.

After hearing O’Connor’s comments, Roustan said Live Nation has provided the project proponents with design and concert expertise but doesn’t have knowledge about its financial viability.

“How can Riley say that?” said a surprised Roustan, who is also chairman of Bauer Performance Sports. “He won’t be operating the building. He doesn’t know the costs. That’s what Global Spectrum is doing for us.”

Frank Russo, Global Spectrum’s senior vice president for business development and client relations, said his firm provided the estimate of event days and described it as a “conservative realistic number” for financial projections.

“We certainly feel the arena can be viable with 130-plus nights of activity, including some form of hockey — whether it’s NHL or not remains to be seen,” Russo said.

He said Global Spectrum based its projection on the region’s population and demand for event space in the Toronto.

Markham Mayor Frank Scarpitti said the city has always said it would take a combination of sporting and cultural events to make the arena viable.

“I have to believe Live Nation when they tell me there is pent-up demand within the GTA for Sports and Entertainment,” Scarpitti said. “They are in the business. When they tell us, on a conservative basis, that they will have over 100 events there at that facility — that’s something happening there every third night and to me, that’s something that is viable.”

Scarpitti said he thinks the arena with or without a tenant will be a catalyst to shape downtown Markham and attract future investment.

“We have gone through this with Live Nation; we have gone through this with the private sector, and I don’t think the private sector would be putting in $162.5 million if they didn’t feel it was going to work with any kind of major sports franchise in there,” Scarpitti said.

Regional Councillor Jim Jones, who has been a critic of the public-private nature of the deal, says he isn’t sure what numbers to believe any more.

“A lot of people are basing their decisions on what Graeme is telling them,” said Jones. “But it’s still not clear to me if, based on those numbers alone, the arena can work.”

In earlier public presentations, GTA Sports and Markham touted Global Spectrum and Live Nation as part of a “world class partnership” and “key players.”

But Russo added that Global Spectrum is not a partner with GTA Sports and will be a “fee-based contractor” responsible for managing the arena, booking events and working with, but not limited to, promoters such as Live Nation.

“Part of our role at this stage is to get the project to the point of financial close,” Russo said.

O’Connor also said there is no formal agreement with Live Nation and there have been no talks since April.

But O’Connor said he has no problem with GTA Sports describing Live Nation as a “partner” as long as it’s not in a “derogatory manner.”

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